Top Ten Frequently Asked Questions
1) How long will this all take?
Each transaction is different. Any number of factors can affect the speed at which a transaction goes through. This could include something such as someone in the chain going on holiday, (a frequent issue for people moving during the summer months). The best advise that we can give is that you don’t set your heart on a moving date until your transaction is ready to exchange contracts. However, do advise your legal advisor of any preferred timescales you have in mind so that these can be assessed. However, until you have had a survey done and reviewed the results and your legal advisor has received the Title to the property and checked these it would be unwise to set your heart on any specific timescales.
2) What are Searches?
The searches that are undertaken will depend on the nature of the property. They are designed to provide further information about the property that you intend to purchase. For example an Environmental Search will advise whether there are any issues regarding possible land contamination, a Drainage Search will provide you with information as to the route of the drains and sewers serving the property and whether they are maintained at the public expense. A local search is the main search that is done and this will give you information about the planning and building regulation history of a building together with details of any financial local authority charges or breaches of planning permissions. A local search will also provide details on whether the roads serving the property are public highways and about any nearby road or railway schemes that might affect the property. As you will be liable for any disclosures made on these searches following completion it is vital you undertake the searches before committing to the purchase so that you have as much information to hand as possible about the property you intend to purchase.
3) Why do I have to provide evidence of ID and evidence of the source of my funds?
These days you will not be able to complete any land transaction without first providing evidence of your identity. This usually takes the form of a either your passport or driving licence and a utility bill. Remember if you are providing your driving licence as evidence of ID it must be both the paper part and photo card part, one is not acceptable without the other.
Evidence of your source of funds is required under Money Laundering Regulations. Don’t be offended when you are asked to produce this as by Law your legal advisor will need to have this information on file. You may be asked some further questions about your source of funds when you submit this information so just ensure that you provide as much information as possible to prevent this issue from causing any delays to your transaction. You will also need to ensure that you provide this information before you pay any money in to your legal advisors.
4) I have signed the contract. Does that mean I have exchanged?
No. By signing the contract for the sale or purchase of land you are not committed to the transaction. That only occurs when contracts are formally exchanged. Your legal advisor will exchange contracts on your behalf once they have all your signed paperwork , deposit funds and confirmation from you that you are ready to go ahead and agree the suggested completion date. The process of exchange will normally take place over the phone between solicitors whereupon the contract will be dated and the solicitors will put their names to the contract. Once this process is complete the contract is legally binding. The actual process is short but if there is a chain of transactions then the process of exchange can take some time as all transactions have to exchange in order to commit each member of the chain to completion on the same date.
5) When do I have to pay in my deposit?
If you are paying a deposit for your purchase then you don’t have to pay this at the outset of your transaction. You will usually pay it by a same day bank transfer, (also called a CHAPS or TT Transfer), usually very shortly before you exchange contracts. A deposit is usually 10% of the purchase price but can be a different figure. If you intend to pay a deposit that is less than 10% it is best to make sure that your Seller is aware of this as soon as possible. It is always worth keeping the funds in your account for as long as possible so that they are earning maximum interest for you.
If you are putting up more than 10% towards the purchase then how you transfer the funds is entirely up to you. You can either pay the whole lot in in one go, (which is best if you anticipate a short time between exchange and completion, i.e. no more than 2 weeks), or if you are going to have a longer period of time between exchange and completion then you can transfer the 10% in time for exchange and the balance in time for completion.
It is worth considering that payments by cheques can take up to 8 working days to clear from the date that the cheque is cashed, so this isn’t the quickest way to transfer funds. Also don’t pay cash in to your legal advisor as this will significantly delay your transaction.
Note: It is best to ensure all your funds are cleared with your legal advisor no later than the day prior to completion.
6) How long does there have to be between exchange and completion?
There is no fixed timetable for a Conveyancing Transaction so this timescale is however long it needs to be for everyone to be ready to complete. Crucially there needs to be sufficient time for any mortgage funds to be requested and for everyone to arrange removals. If everything is ready then exchange and completion can occur on the same day. Alternatively completion can sometimes occur many months after exchange, (this is common for new build developments).
7) Why does my partner have to sign paperwork when they are not going on the deeds?
You might be buying a property in your sole name and your spouse, partner, other family member or friend will be moving in with you. If you are getting a mortgage then your mortgage provider is going to want that other person to sign something to say that they will give up any rights that they may acquire in the property . They may have to get their own independent legal advice before signing the form. The document must be signed and in the possession of your legal advisor before completion.
8) Can I split the purchase price between the property and fixtures and fittings?
You can but you need to be cautious of the fact that the Inland Revenue are aware of people doing this to avoid stamp duty. Particularly if the split will result in you coming down a Stamp Duty Bracket. The Inland Revenue can investigate a transaction for up to six years following completion and so you need to be sure that any such split is justifiable. To be able to do this you will need to ensure that a full list of the fixtures and fittings is produced which shows the value for each item. More information is available on the Inland Revenue website but in essence you will need to ensure that the price being paid is fair and reasonable and that the items being sold fall into the category of what the Inland Revenue classify as Fixtures and Fittings.
9) How can I protect my financial investment in a property?
This will depend on the nature of the interest that you want to protect and also how you want to be able to recover your investment. These days it is common for people contributing towards a purchase to protect their investment by way of a Trust. This will protect the amounts being paid in when the property is sold on. However, you may also want to consider protecting your financial investment by way of a charge over the property, (i.e. a private mortgage). This may be the case if you are lending money to someone to purchase a property but will not actually be on the Deeds yourself. If you choose this option and the purchaser is getting a mortgage as well then the Mortgage Provider will need to consent to this arrangement.
10) I am buying a leasehold property and there are additional charges payable that were not on my initial quote. Why is this?
They will be fees payable to your landlord/management company and are payable under the Terms of the Deeds to the property that you intend to purchase. When you buy a leasehold property you will have to serve notice on the landlord/management company on completion to confirm that you have purchased and/or mortgaged the property. The landlord or management company will nearly always charge a fee for this. In addition to notice fees there may be other charges payable and your legal advisor will have advised you of what these are when they report to you on the Deeds. If Rent or Service Charges are payable then these are often apportioned on completion so that you pay back to the Seller any Rent or Service Charge which the Seller paid but relates to a period of time after you have purchased the property. This will usually be paid to the Seller at the same time as the purchase price is paid over on the completion date.